A lot of startups are now using crowdfunding to raise capital for their new business. It is a very popular method and it is driving a lot of revenue across the world each day. It is a major game changer, as an entrepreneur you might be thinking about crowdfunding your next venture. On this post, we will be discussing all the things you need to know before you consider crowdfunding a startup. To learn more about crowdfunding and how it can benefit your startup, you can check out our previous post on crowdfunding here.
What is Crowdfunding?
Crowdfunding is raising money from a large number of people for a business or project. The group of people usually contribute small amounts of money. The people who usually donate this money are your potential customers and now thanks to technology, it is done over the internet. There are now websites and social media sites just for this purpose.
What You Need to Know about Crowdfunding a Start-Up
Before you create a campaign to finance your business from crowdfunding sites, there are some things you need to know. These things have to be covered and clearly, defined because they will increase your chances of raising the capital you need to finance your venture.
Know Your Idea
When thinking of crowdfunding your startup, you have to ensure you really understand and know your idea. Before you can compel others to invest in your business, you have to ensure you know your idea inside out. If you don’t effectively explain what your idea is and how you plan to achieve it, your efforts will be futile. To win over investors you have to ensure your campaign is convincing and compelling. A big part of developing a winning campaign is to make it easy to understand and making it easy to understand involves knowing your idea inside out.
Know Your Platform
When crowdfunding a startup, you have to ensure you really know the platform you are going to use. There are so many platforms available for crowdfunding, such platforms include Kickstarter, Gofundme, Fundable etc. They all have different rules and regulations, it is important you study each of them to determine which one is best for your startup. Some sites require you to meet or exceed your stated goal to receive any money, while others will let you keep whatever you raise, even if it’s not up to your original goal. They also each have their own network commission fees. So don’t just randomly pick a site, you have to ensure you learn about each one to make an informed decision.
Know Your Message
Crowdfunding a startup is all about the message. With the right message, you can convince millions of people to invest in your idea. When creating a message, you have to remember to focus on the problem you are solving, rather than the benefits you are offering. You are competing with millions of other businesses, you have to work to convince your investors that your idea is the real and only solution to whatever problem you are trying to solve.
Know Your Market, Space, and Positioning
When crowdfunding a startup you have to know your market and your position in the market. Where do you fit in the market? Knowing where you fit in your market will give you some familiarity with your competitors and how to beat them. This knowledge will help to better frame your message which will help get more investors.